Risk Profile in General Contracting
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There are no standardized way to document a risk profile, but it is vital to have one to keep the risk management efficient <ref name="orange">HM Treasury. 2004. The orange book: Management of risk principles and concepts.</ref> | There are no standardized way to document a risk profile, but it is vital to have one to keep the risk management efficient <ref name="orange">HM Treasury. 2004. The orange book: Management of risk principles and concepts.</ref> | ||
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Revision as of 00:34, 29 September 2015
This article is going to give an overview of Risk Profiling in General Contracting. General contracting is the most common project coalition in the construction site, and preferred by the EU procurement directives. .[1] The general contractor has a contract with a client for the entire execution of the project, and is responsible for the day-to-day overview on the construction site.
Risk profiling in Construction industry are complicated because these kinds of projects carries complex risks for all involved in the project, not only the stakeholders, but for the process alone. When the construction takes place the risk increases extremely, especially in congested or populated areas.
Introduction to Risk Profile
To explain risk profiling it is important to define the word risk, this is a well-used term with many definitions. How risk is defined is different from person to person, it depends on experience, attitude and viewpoint. [2] Some will argue that risk is something with a consequent negative outcome. [3] Other will say that it is both negative and positive, like a threat and an opportunity.[4] International Organization for Standardization defines a risk as “the effect of uncertainty on objectives” (p. 1) in ISO 31000:2009. The last definition has been adopted in the British Standards Institution (BSI) [5] the theory of looking at a risk as a uncertainty of outcome, either positive opportunity or negative threat [6] will also be adopted in this article.
Fraser described a Risk Profile as “A periodic documentation of key risks to an organization to achieving its stated objectives over a specific future time” (Fraser 2010: p. 171)[7] or as ISO defines it “a description of a set of risks” (p. 1) in ISO 31000:2009
Risk Profiling is a document that should contain the overall prioritized assessment of specific risks an organization faces.[6] This can be used as a method to find the optimal level of risks an individual or corporation are willing to accept. A corporation’s risk profile usually shows how eager a company is to take a risk and how that will affect the firm’s strategy, or it can be an evaluation of a risk the corporation exposes too. [8]
Structure
There are no standardized way to document a risk profile, but it is vital to have one to keep the risk management efficient [6]
References
- ↑ G.M.Winch (2010), "Managing Construction Projects", Chapter 5.4.1 ,Second edition, Wiley-Blackwell.
- ↑ Walewski J, Gibson GE, Dudley G (2003) Development of the international project risk assessment (IPRA) tool. Construction Industry Institute, Austin.
- ↑ Baloi D, Price ADF (2003) Modelling global risk factors affecting construction cost performance. Int J Proj Manage 21(4):261–269
- ↑ Segal S (2011) Corporate value of enterprise risk management. Wiley, Hoboken
- ↑ Zhao X (2015) Enterprise Risk Management in International Construction Operations. Springer, Singapore
- ↑ 6.0 6.1 6.2 HM Treasury. 2004. The orange book: Management of risk principles and concepts.
- ↑ Fraser J (2010) ENTERPRISE RISK MANAGEMENT. John Wiley & Sons, Hoboken
- ↑ Risk Profile Available from: www.investopedia.com, (20.09.2015)
